Unilever Plc Strategic Management - Essay Example

? CONTENTS INTRODUCTION 2 Vision and Mission 2 Future of the company 3 Internal, External and Temporal Environment 3 METHODOLOGY 5 Diagnosis of the problem 6 Implementing Change Strategy at Unilever 7 Using Organizational Development Strategy 8 Using Force Field Analysis 9 Organizational Silence 10 Implementing Change 10 The role of Human Resource Management 11 Problems with Change 11 Recommendations 12 Conclusions 13 References 15 INTRODUCTION Unilever Plc is one of the biggest manufacturing companies in Nigeria. Its operations started on the west coast of Africa in 1923 as Lever Brothers Nigeria Ltd. It is a subsidiary of Unilever Plc of UK. Over the years through several mergers and acquisitions, the company’s name changed to Unilever Plc to reflect the diverse holdings of the owners. Today, 49% of the equity of the company is owned by Nigerians and Nigerian organizations, while the remaining 51% is owned by Unilever Plc of UK. The company prides itself as being in virtually almost all sectors of the economy which includes nutrition, hygiene, personal care etc. and its products are of world class standards. The popular ones in the market include Omo detergent, Persil, Lux soap, Lipton Tea label, Blue band margarine, Close Up toothpaste and many more. With an employee strength of over 10,000, turnover of N44 bn, profit before tax of over N5 bn, shareholders funds of N8 bn, indeed Unilever Plc is a company the exemplifies a giant productive entity, hence the decision to adopt it as a case study for this paper. Vision and Mission Every organization has its raison d’etre in other words, its reason for existence. This is stated in its mission and vision statements. Drucker (1974) classifies these to include what is our business? What will it be? And what should it be? For Unilever Plc, its vision statement is inspiring billions of people to take small everyday actions that add up to a big difference. The mission statement is to meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. Future of the company The company has four pillars which directs the long term direction and ensures that it knows where it wants to go and how it’s going there and this is inline with its vision and mission statements. These are: to create a better future everyday; to help people feel good, look good and get more out of life with brands and services that are good for them and good for others; to inspire people to take everyday actions that can add up to a big difference for the world; and to develop new ways of doing business with the aim of doubling the size of the company while reducing the environmental impact. These four pillars which serve as the guiding and driving principle of Unilever are achieve through its key two strengths. First, its strong roots in local markets and firsthand knowledge of the local culture, and secondly, world class business expertise applied internationally to serve consumers everywhere. These key two strengths has over the years ensured consistent growth, increase return on investment (ROI) and maintained a relative high share price in the stock exchange market. Internal, External and Temporal Environment According to Kazmi (2002) the environment in which an organization exists could be broadly divided into two parts: the external and the internal environment. Environment literally means the surroundings, external objects, influences or circumstances under which someone or something exists. The environment of any organization is “the aggregate of all conditions, events, and influences that surround and affect it” (Davis, 1982). The internal environment of Unilever from the above description involves all that goes on with in the company. Unilever like most production companies that wishes to make optimum use of available resources runs three shifts, Monday to Saturday. While Sundays are basically for the maintenance of production machineries, Administrative and marketing staff work from 8 am to 4 pm. Monday to Friday, for this category of staff, there is no shift work. The CEO is the chairman of the board, and all authorities and chain of command originate from him. There are vice presidents and controllers, engineers, managers and supervisors that assist in the attainment of organizational objective. Least on the chain of command is the casual workers. Casual or temporary workers are usually employed based on the availability of work. This group of workers which make up the entire workforce effectively work together to translate policies into actions. And no doubt the success story enjoyed today can be directly attributed to their effectiveness. The external environment consists of all those factors which provide opportunities or pose threats to an organization. In a wider sense, the external environment encompasses a variety of factors like international, national, and local economy; social changes; demographic variables; political systems; technology; attitude towards business; energy sources; raw materials and other resources; and many other macro-level factors (Kazmi 2002). The external environment of Unilever can be categorized as political, environmental, social and economic. Nigeria being a developing country does not demand much from companies operating within its boundaries. On the contrary, programmes and policies are formulated to encourage foreign direct investments (FDI) in the country. This can not be compared with the operations of companies in developed countries. Unilever, rather than being influenced by its external environment is ably influencing the environment. An instance of this is the appointment of Chief Ernest Shonekan, a one time CEO of UAC, an associate company to Unilever as the President of the Interim National Government (ING) in Nigeria. Issues such sustainable development, protection of the environment, religious uprising, and their likes are yet to have any significant impact on the operations of the company. This cannot be compared to the oil industry, where pollution has contributed to much negative publicity. Temporal environment has been defined as a situation being limited by time, or existing for some time. The temporal environment of Unilever includes mainly the seasonal nature of the major raw material used in the production of soaps, palm oil. Vagaries in the price of palm oil and its supply create problem for the company. METHODOLOGY The information used in the study was basically sourced from Unilever Nigeria Plc. The study could not have been possible without the help of staff of Unilever. The study adopted the survey method to investigate how change can be managed in Unilever Plc to better contribute towards achieving the organizational objectives. According to Okeke (2001), survey design is conducted to determine the status quo, facts, opinions, attitudes, behaviour, and so forth and can be conducted via questionnaire, interview, observation and panel study. Data used for the study were collected both from primary and secondary sources. Primary sources used were interviews and questionnaires; while the secondary sources were data from Unilever records, year books, annual statement of accounts, books, journals, and the internet. The questionnaire was structured to enable the responses to comparable. Uzoeshi (1988) recommendations on how to avoid hypothetical, leading, emotional, calculative and ambiguous questions were strictly adhered to. The study was carried out to comprise all the business activities of Unilever in Nigeria. This includes the head office and other regional activities. This is inline with Nwana’s (1985) postulation that ideally it will be best to study every member of the population, so that the findings of the study can command lots of respect. Diagnosis of the problem Unilever Nigeria is a major player in the Nigerian manufacturing sector. But all business have competitors, who are trying to gain a better market share and increase their profitability. For Unilever, major competitors include PZ Industries, Udeagbala Holdings, International Equitable Associations etc. Although there are other smaller companies, with their fair share of the market, but PZ Industries has been matching Unilever in many aspects. First the two companies are similar in many way, both are foreign owned (over 50% of equity belongs to foreigners), secondly, both are well diversified in terms of products mix, and finally, their products match each other in quality and usage. For instance, Lux soap from Unilever has an identical product in Joy soap from PZ; Unilever Omo detergent is competing with Elephant detergent from PZ, the example simply goes on and on. The threat from PZ Industries and other minor players are diminishing the market share of Unilever and also reducing their revenue base and their ability to maintain cost effective production base. Unilever also has challenges facing it in the Nigerian environment. These challenges have continuously increased its cost of production, leading to declining revenue. First if the high cost of power. Due to the inefficient supply of public electricity, the company operates its own power supply. This simply means a higher cost of production. The electricity supply in Nigeria can at best be termed non existing, as no serious organization depends on the National grid for its power uses. The cost of fuel for power generation, maintenance of transformers and other ancillary and related services can significantly influence cost of production. The next problem facing Unilever is the declining value of the local currency the Naira against the dollar and other major world currencies. Lack of stable value for the local currency means translation problems and at times, a higher cost of production. Over the years, the value of the Naira to the dollar has fluctuated to over 50%. The security situation in Nigeria is also a major problem facing manufacturing concerns, especially companies like Unilever that employs a significant number of expatriates. Armed gangs in the country have developed an unquenchable taste for the kidnapping for ransom of expatriates. This situation makes it even more costly to hire expatriates and get them to come to Nigeria to work. This has a two fold effect. First, services of qualified professional can not be obtained and second, products can not be guaranteed to be of high quality, which means lots of rejects, again increasing cost of production. Implementing Change Strategy at Unilever For all organizations, implementing change involves several steps Timetable: before a change can be successfully implemented, there has to a well articulated timetable. This timetable will include a trial period and a transition period. Depending on the organizations, this period might be long or short depending on the organization. For organizations where there is resistance to change this period will be long but organizations that flow with changes and innovations this period will be short. Unilever can be classified as an organization that adapts to changes easily, hence its leadership position in the market; as such a short timetable is needed. Levels involved: changes usually involve different levels in the organization. Some changes maybe organization wide, department wide, multi-department. It is important to identify the people involved in the change. For Unilever, this change will involve mainly the marketing department and production department, and research and development departments. These 3 departments will serve as pivot to ensure that the introduced change will be successful. Using Organizational Development Strategy Organizational change is undertaken to improve the efficiency and effectiveness of an organization towards achieving its stated objectives. Due to this, it is importance to properly and thoroughly analyze the organization before attempting any change programme. The fact that firm A, B, and C, are implementing a change programme does not necessary mean, that every other firm in the industry should introduce its change programme. Organization change can be introduced through organizational development. Organizational development (O D) can be defined as a response to change, a complex educational strategy intended to change the beliefs, attitudes, values, and structure of organization so that they can better adapt to new technologies, marketing and challenges, and the dizzying rate of change itself. O D may also be defined as a plan for relating and integrating the different organizational improvement activities engaged in to accomplish organizational objectives (Kennedy, n.d). To fully understand O D and utilize its benefits, there should be a broad understanding of the context of the change efforts. According to Kennedy (n.d.) there are 3 basic approaches to O D, the are Structural, Technical and Behavioural. Structural refers to changes the relates the elements of the organization to one another, such as removing or adding layers to an organizational hierarchy, downsizing, and mergers. Technical refers to changes in the use of productive equipments, machineries, methods, automation, job design etc. technical changes have helped companies and their employees become more productive. Behavioral changes emphasize attitudinal changes among the individuals in the organization. It involves their level of morale, motivation, and commitment. In Unilever Nigeria, one approach is not used to the exclusion of others. There is an integration of the different approaches to O D. An approach known as Stream Analysis is used. It is a method used in planning behavioural, structural and technical changes. This method begins by identifying interventions that Unilever can implement as part of the greater O D programme. It helps the organization to diagnose and plan interventions over a period of time, and also provides a graphical portrayal of the changes and allows for progress in implementing specific changes to be plotted on the graph. Using Force Field Analysis Kurt Lewin developed a technique in management when planning and implementing a change programme, and also useful in team building projects, and when attempting to overcome resistance to change. This model assumes that there are forces in every change situation both driving and restraining forces that influence the change. The driving forces are those forces affecting a situation by pushing it in a particular direction. They tend to initiate a change and keep it going. These are forces that work in favour of the organization by helping in the introduction and implementation of change. While the restraining forces are forces acting to restrain or decrease the driving forces. Factors such as apathy, hostility, and poor maintenance of equipment are examples. For Unilever, factors driving change include customers want for new products; increase speed of production, increase volume of output; control rising and maintenance costs etc. while factors which may lead to resistance to change include workers apathy to new and improved production techniques. Organizational Silence At times in a work situation, employees may consciously decide to withhold their voices, this has been termed Organizational silence by Morrison and Milliken (2000). This effectively prevents organizations from hearing the voices of their employees. Such practices have limiting effects as it prevents the upward flow of information in an organization. The importance of upward flow of information in an organization has been aptly demonstrated by several scholars (Argris, 1977; Redding, 1985; Ewing, 1977; Nemeth, 1997). Organizational silence has been explained as what happens when the CEO appears at work with no clothes on. While most of the employees commend his decision not from their appreciation of it, but for fear of being punished. This is what happens when organization don’t promote upward flow of information from subordinates to the higher echelon of management. In Unilever Nigeria Plc, many channels of communication are provided for direct and even indirect communication with management. Apart from suggestion box, there programmes where everyone interacts in an informal setting, all designed to bring out the fears, suggestions, recommendations of the rank and file. So that top management can better gauge their feelings, discontents, and more importantly find ways of proffering lasting solutions. Implementing Change A change programme that remains on the shelve has no meaning and it’s a huge loss to the organization. The change has to be implemented to achieve organizational objectives. To implement change, the management first of all recognized their corporate strengths. These 5 corporate strengths makes Unilever one the strongest manufacturing firms. These are: a strong capability in branding and marketing; ability to use mergers, acquisitions, and diversifications further growth strategies; an efficient research and development team that from time to times creates new products that turn out to be world class products; its corporate structures that ensures fluidity and quick turn around in decision making process; and a management team that is dedicated towards achieving goals. Unilever fully understands that changes is inevitable in today’s business environment, and are committed towards acting responsibly in achieving and implementing change. From the 5 strengths listed above, The role of Human Resource Management To achieve change in an organization, all hands must be on deck. The support of top management, middle, and lower level management is necessary. More so, the Human resource manager has a significant role to play. Since most of the problems of change are people oriented, the Human resource manager should have a skill set capable of matching the diverse idiosyncrasies that employees bring to the work environment. The Human resource should be a champion of change, at all times, and also be able to douse the tensions arising from discovery of change initiatives by providing the news on change in a timely and credible manner ((Johnston, 2009). To achieve this, a lateral, diagonal and other form of communication channels should be actively utilized in the work environment to disseminate information in a timely and proper manner. For instance, it will tantamount to waste of resources if a new policy is billed to take off on the 10th of January, and by the close of work on the 9th, most employees are yet to receive the memo to that effect. Situations such these create frustrations, antagonism and other negative attitudes on the part of employees. Problems with Change The main problem with change is resistance. People resist change for several reasons. On top of the list is the fear of the unknown. Other reasons included vested interest, fear to loose something of value, don’t understand the change and its implications or outright disbelieve in the benefits of the change; fear of failure, leaving the comfort zone, and so many others. Bateman and Zeithaml (1990) outlined others reasons to include inertia or the tendency of people to become comfortable with the status quo; timing, as in when the change was introduced at a time of frosty relationship or extra busy periods. Also problems arise with change when proper evaluation of the change results are not done or measured. Measuring results ensures that organizations know is their change programmes are achieving the desired results. Without any kind of evaluation method or programme available, the change is a waste of management and organizational resources. Problems are also notice when there is much hero worship the in the work environment. When heroes exist in the organization, they often get in the way of change especially if they are not in favour of the proposed change. Their followers immediately latch on their stand on the change, and such behaviours often spell doom for change programmes. Recommendations To overcome problems with change, the following are recommended. Education: when people are educated on the importance of change, they are more willing to support it, than when it is imposed on them. So before change is introduced, it is important to properly educate and inform them on its importance and benefits. Participation: when people participate in the process of introducing change, when they see it as their own contribution and recommendation, they are more ready to support it. So before introducing change, get people to make their own inputs towards it. Support: Organizational support should be provided for change to effective. Resources should be mapped to help in the implementation of change. When organizational support is lacking, change cannot be effectively achieved. Support may be in the form of resources, such as office space, or logistics such as information and transport. Without these supports, people might resist change implementation. Negotiation: resistance to change can also be reduced considerably through negotiation. Change especially concerning labour and staff can be made virtually impossible for an organization. But with negotiation, an amicable solution can be arrived at, while not satisfying all the parties, but at least can be take off point for a more satisfying alternative. Manipulation: When people resist change, they can be manipulated to accept change. Several methods are available. The carrot and stick management approach has been known to achieve good results in many instances. With this approach, rewards are given to those who wholly embrace the change, while punishment is meted out to those resisting change. Conclusions This paper has effectively looked at change in a production organization. Unilever Nigeria Plc was chosen as an company for this purpose. The company has several qualities which necessitated its being chosen for the study. The environment affecting the company, both external, internal, and temporal were analyzed. To do this, the general environment of business was first analyzed, then the special environment as it affects Unilever was treated. Means of handling change to obtain desire results are proffered. The methodology for the paper included its design and population studied. Other areas touched include the role of the human resource manager in an organization with respect to implementing changes. The importance of the human resource manager was thoroughly dealt with. Organizational silence as a factor that may lead to change resistance was also covered. Here organizational silence was explained as a situation where employees are afraid to speak up in matters negatively affecting the organization for fear of reprisals from the management. Finally recommendations for eliminating resistance to change in work environments were given, these recommendations include education, timing, organizational support, negotiations, participation and manipulations, which if properly implemented will ensure the attainment of goals of the organization. References Argryis, C. (1977) Double loop learning in Organization Harvard Business Review. 55(5), 115-129. Bateman, T. S. and Zeithaml, C. P. (1990) Management: Function and Strategy. Available at http://www.answer.com/topic/managing-organzational-change. Accessed on 7th Jan, 2011. Davis, K. (1982). The Challenge of Business. New York: McGraw-Hill. Drucker, P. F. (1974). 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